ADB: Azerbaijan's state budget deficit to reach 3.4 percent of GDP

Asian Development Bank (ADB) forecasts a deficit of the state budget of Azerbaijan in 2020 at the level of 3.4 percent of GDP, local media reported citing Asian Development Outlook 2020 released publication in April.

“The deficit of the state budget of Azerbaijan, including transfers from the State Oil Fund of the Republic of Azerbaijan (SOFAZ), will rise to 3.4 percent of GDP in 2020 (0.25 percent of GDP in 2019), as rising social spending and public investment increase total spending by 10.2 percent,” the statement said.

At the same time, according to estimates of ADB analysts, the deficit excluding SOFAZ transfers will amount to 17.2 percent of GDP.

It should be noted that the Azerbaijani government has allocated $589.4 million from the budget to mitigate the impact of the coronavirus (COVID-19) pandemic on macroeconomic stability, the labor market, and entrepreneurship.

In 2020, budget revenues, including SOFAZ transfers and the price of oil at $55 per barrel, were projected at 29.4 percent of GDP.

In fact, revenues may be lower if oil prices set in March 2020 continue until the end of the year.

“Amendments to the Tax Code, which provide for an increase in tax revenues, provided that transfers from SOFAZ would provide 47 percent of revenues in 2020 and 45 percent in 2021. The government predicted that SOFAZ would receive $ 12.4 billion from oil exports in 2020, 91 percent of which would be transferred to the budget (in the form of transfers),” ADB disclosed.

In addition, ADB considers that given the higher growth rates and debt management policies adopted in 2018, the government expects to reduce the total volume of public and publicly guaranteed external debt to 11 percent of GDP by 2025.

The forecast for state budget revenues for 2020 is $14.2 billion, expenses – $15.8 billion. The state budget deficit for 2020 is projected at $1.6 billion or 3.3 percent of GDP.